Franchise brands, whether in fast food, retail or in services, are amongst the most visible in the world and have become household names because of their visibility – be it in shopping malls, high streets, strip malls, in industrial areas or in home bases. FASA’s recent survey shows that fifty-nine percent of franchisors have business units/stores in shopping centres/malls and 62% have them are situated in high streets, where most passing trade occurs. A quarter of the franchised outlets are operated from a home base or in an industrial area.
Significant increases in the number of businesses on high streets (from 54% to 62%), and in industrial areas (from 17% to 23%) with a small drop in shopping malls and centres (from 59 to 57%) points to a resistance on the part of businesses to paying high rentals in a shrinking economy.
The growth of on-line shopping (at an annual rate of close to 25% in recent years) and a change in consumer shopping habits is reshaping the retail world and a general decline in the popularity of malls, especially in the USA, is causing concern around the world. This is also evident in South Africa where there is a proliferation of new malls all targeting the same market but struggling to attract foot traffic. It then becomes logical that traders become concerned when department stores close their doors and even more disconcerting when smaller businesses shy away from opening businesses in malls because of the prohibitively high rentals. The answer, according to the experts, lies in shopping malls reinventing themselves as centres for leisure – offering add-on activities and putting on special events to attract shoppers – and being open to rent negotiations to attract and keep tenants, especially small businesses, as part of the tenant mix.
Finding new markets and greener pastures seems to also be a trend with FASA’s survey showing that thirty-one percent of franchisors interviewed have stores outside of South Africa. Most of these stores are to be found in the neighbouring countries of Namibia and Botswana. Proximity to neighbouring countries, in comparison to countries further afield in East or West Africa, make them more popular choices for expanding outside of South Africa.
A relatively small proportion of franchisors (one in eight) claimed to be represented outside of Africa. One in eight franchises claimed to be an international brand.